Increase in U.S. Imports, Exports Signal Global Pickup

A decline in the cost of petroleum that is helping to trim the import bill, combined with sustained job gains, is also boosting the buying power of U.S. households. Photographer: Chip Chipman/Bloomberg

Jan. 11 (Bloomberg) -- The trade deficit unexpectedly
widened in November as U.S. imports jumped almost four times
more than exports, gains that signal a rebound in global growth.

The gap swelled 15.8 percent to $48.7 billion, the largest
since April, Commerce Department data showed today in
Washington. The shortfall exceeded all projections in a
Bloomberg survey of economists. Imports reflected record demand
for consumer goods, while U.S. companies benefitted from more
overseas sales of equipment such as telecommunications gear.

American retailers stocked up on foreign-made mobile phones
and computers heading into the holidays, showing little concern
that the budget impasse in Washington would hurt household
spending. Strengthening economies in Asia, combined with a
sustained expansion in the U.S., will probably spur orders at
companies such as Alcoa Inc.

“Today’s data confirm that there was some stabilization in
November,” said Ryan Wang, an economist at HSBC Securities USA
Inc. in New York, who is the third-best trade forecaster over
the past two years, according to data compiled by Bloomberg.
“There have been some hints from manufacturing surveys that
trade and production have improved a bit.”

Stocks were little changed, after the Standard & Poor’s 500
Index rose to a five-year high, as banks slumped amid Wells
Fargo & Co.’s results and higher Chinese inflation raised
concern officials may curb stimulus. The S&P 500 fell less than
0.1 percent to 1,472.05 at the close in New York.

Elsewhere, the Japanese government will spend $116 billion
(10.3 trillion yen) to drive a recovery from a recession in
Prime Minister Shinzo Abe’s first major policy initiative to end
deflation and spur growth, according to a statement today by the
Cabinet Office.

China’s Economy

China’s exports jumped 14.1 percent in December from a year
earlier, the most since May, a report showed yesterday. Together
with a 19-month high in the pace of China’s manufacturing
expansion reported Dec. 31, the figures are boosting optimism
that a recovery in the world’s second-biggest economy is gaining
traction after a seven-quarter slowdown.

“As we improve and the rest of the world improves, exports
and imports are both going to go higher,” said Brian Jones, a
senior U.S. economist at Societe Generale in New York, whose
forecast of $45 billion was the highest in the Bloomberg survey.
“You end up having deterioration in the accounts because I
think imports will grow faster than exports.”

Fed’s Plosser

Federal Reserve Bank of Philadelphia President Charles
Plosser said today in an interview with Bloomberg Television
that the central bank may need to slow or halt bond buying this
year as the economy makes “modest progress.”

“Given where we are, I think I would not be surprised if
we face the choice of having to rein in the purchases sometime
during this year,” Plosser said in the broadcast interview.

The median forecast in a Bloomberg survey of 69 economists
projected the deficit would narrow to $41.3 billion. Estimates
ranged from gaps of $39.8 billion to $45 billion. October’s
deficit was revised from an initially reported $42.2 billion.

Imports increased 3.8 percent to $231.3 billion, the most
since April. Purchases of foreign-made autos and parts climbed
by $1.51 billion and demand for mobile phones jumped by $1.81
billion, the report showed.

Exports increased 1 percent in November to $182.6 billion,
the report showed. The gain was also led by sales of automobiles
and parts and telecommunications equipment.

Tracking Estimates

Economists at Barclays Plc, Morgan Stanley and Nomura
Securities were among those who trimmed their fourth-quarter
tracking estimates after the report. The deficit adjusted for
changes in prices, used to calculate gross domestic product,
rose to $51.9 billion, the highest since April 2008, from $46
billion.

Nonetheless, the immediate hit to GDP will probably be
smaller than the full increase in imports, as purchases of goods
made overseas signal a pickup in consumer spending and business
investment, which add to growth.

“At this point, it looks as if real GDP growth is more
likely to come in around 1.5 percent to 1.75 percent,” RDQ
Economics LLC economists John Ryding and Conrad DeQuadros wrote
in an e-mail. “However, there is often an offset in a faster
inventory build when imports surge, and we will not change our
fourth-quarter growth projection until we have the November
inventory data in hand.”

The Commerce Department will issue November business
inventories statistics on Jan. 15.

Factory Exports

American manufacturers are selling more overseas. The
Tempe, Arizona-based Institute for Supply Management said its
factory export gauge rose in December to a seven-month high.
Commerce Department data show exports slumped in October by the
most in almost four years.

Companies such as Alcoa, the largest U.S. aluminum
producer, are counting on higher demand from recovering
economies led by China.

Alcoa is projecting aluminum prices will rise with “China
rebounding, Europe kind of muddling through -- probably a little
better than what most people thought -- and the U.S., hopefully
avoiding to hit the debt ceiling and growing at the same pace
that it has been growing last year,” Chief Executive Officer
Klaus Kleinfeld said on a Jan. 8 earnings call.

The November trade data may have also been influenced by
port disruptions. Superstorm Sandy made landfall Oct. 29,
causing billions of dollars in damage along the East Coast and
delaying freight traffic in the region. In addition, clerical
workers at the ports of Los Angeles and Long Beach, the largest
U.S. port complex, went on strike Nov. 27 for eight days,
affecting about $1 billion of trade a day.

Import Prices

A report from the Labor Department today showed prices of
goods imported into the U.S. unexpectedly dropped 0.1 percent in
December after falling 0.8 percent the prior month. Economists
projected the gauge would rise 0.1 percent, according to the
median estimate in a Bloomberg survey.

The cost of imported fuel decreased 0.1 percent in December
from the prior month. Import prices minus fuel also declined 0.1
percent last month.

For all of 2012, import prices fell 1.5 percent, the first
annual drop since they retreated 10.1 percent in 2008.